CBN Tightens Banking Oversight With End To Forbearance And New Capital Restoration Plans.
The Central Bank of Nigeria (CBN) has announced the termination of all COVID-19-era regulatory forbearance measures, effective 30 June 2025, and directed banks to submit detailed Capital Restoration Plans (CRPs) by 14 July 2025. The move, outlined in a circular signed by Dr Olubukola Akinwunmi, Director of Banking Supervision, signals the CBN’s commitment to strengthening Nigeria’s banking sector as part of its ongoing recapitalisation programme.
The forbearance measures, introduced during the pandemic to ease financial pressures on banks, included waivers on Single Obligor Limits (SOL) and relaxed credit classification rules. With their cessation, banks must now align all credit exposures with existing CBN Prudential Guidelines, restoring risk sensitivity in loan provisioning and asset quality assessments. To support this transition, the CBN has temporarily waived the requirement for banks to retain fully provisioned loans for one year before write-off, allowing faster reduction of Non-Performing Loan (NPL) ratios, provided internal governance standards are met.
Banks benefiting from forbearance are required to submit CRPs within 10 working days after each quarter, starting with the quarter ending 30 June 2025. These plans must outline strategies for full regulatory compliance, including cost optimisation, risk asset reduction, significant risk transfers, and business model adjustments. The CBN emphasised that submitted plans will undergo rigorous review and form the basis for ongoing supervisory monitoring until capital and asset quality indicators are fully normalised. Additionally, banks must provide quarterly disclosures on provisioning status, Capital Adequacy Ratio (CAR) calculations, loan classification data, and Additional Tier 1 (AT1) instrument details to enhance transparency.
The directive builds on earlier measures announced on 14 June 2025, when the CBN suspended dividend payments, bonuses to directors, and investments in foreign subsidiaries for banks under forbearance. These restrictions, aimed at conserving capital, remain in place until full compliance is verified. However, some banks, including Zenith Bank and Access Holdings, have already surpassed the N500 billion minimum capital requirement for international commercial banks, ahead of the 31 March 2026 deadline, demonstrating sector resilience.
Industry analysts view the CBN’s actions as a prudent step towards financial stability. Renaissance Capital noted that banks like GTCO and Stanbic IBTC have proactively exited forbearance by provisioning and writing off affected loans, while others, such as Fidelity Bank, UBA, and FCMB, face challenges in meeting capital targets. The CBN’s temporary lifting of AT1 capital recognition caps until March 2026 provides flexibility but is not a substitute for the broader recapitalisation effort.
Bank representatives have acknowledged the urgency of the 14 July deadline, with several confirming preparations to submit CRPs. A Tier II bank official, speaking anonymously, told Nairametrics, “We are working diligently to meet the deadline and ensure compliance.” The CBN’s structured approach, described as a “firm but supportive framework,” aims to facilitate a smooth exit from forbearance while safeguarding macro-financial stability.
As Nigeria’s banking sector navigates this critical transition, the CBN’s enhanced oversight underscores its focus on responsible banking practices and long-term resilience. With most banks on track to meet recapitalisation goals, the industry is poised to emerge stronger, better equipped to support the country’s economic ambitions.
